For many organizations, the employer mandate and the reporting requirements of the Affordable Care Act (ACA) loom. Employers want to ensure they will be in compliance come January 2016, when the required forms are due to their full-time employees and the Internal Revenue Service.

Yet many organizations remain confused by the law’s many complexities, especially those related to the reporting provisions. In fact, two-thirds of business executives who have attended Paycom’s ACA webinars in the past four months reported they are not ready to comply with the 2015 reporting requirements!

As staggering as that statistic is, it is important that organizations understand options exist for ACA reporting. You might be surprised to learn which method is best suited for your organization.

Who’s Set to Report?Starting this year, Applicable Large Employers (ALEs) – organizations with 50 or more full-time or full-time-equivalent employees – will be held to the mandatory filing, which reports the details of health coverage offered to those employees.

The ACA’s “general reporting” method is completing, in its entirety, IRS Form 1095-C, Employer-Provided Health Insurance Offer and Coverage Insurance. This form must be filed with the IRS for every employee determined to be full-time for at least one month during the calendar year. Additionally, employers must provide either a copy of Form 1095-C or an alternate statement to affected employees by Jan. 31 of the year following the year the insurance was offered.

In an effort to simplify reporting requirements in certain situations, the IRS now allows three optional alternative methods:1. The Certification of Qualifying Offer2. The Simplified Statements for 95 Percent Offer3. The 98 Percent Offer

The Certification of Qualifying OfferThis states that in lieu of Form 1095-C, eligible employers are allowed to certify that they extended a “qualifying offer” of health care coverage to employees, as long as the offer provided minimum essential coverage to them, their spouses and dependents, and that the cost of the coverage did not exceed 9.5 percent of the federal poverty level for employee-only coverage.

This report will include the name, address and Social Security number of each full-time employee, along with the indicator code of “1A” from line 14 of Form 1095-C. This code signifies that the employee received a qualifying offer for all 12 months; no other details are required.

The information provided to employees through either a copy of the Form 1095-C or a general statement in a format “prescribed by the IRS” must state that:

1. the employees (plus any spouse and/or dependents) received a qualifying offer for all 12 months of the year
2. and therefore, they generally are ineligible for a premium tax credit for all of those 12 months.

Most employers wishing to use this alternative method will have to furnish a mixture of simplified and general reports to their workers and the IRS, as not all employees will have been with the company for the full, 12-month span.

However, it is important to note that organizations will not know until the end of the year whether simplified reporting can be used for any individual employee; therefore, it is important to maintain records of ACA-required data – affordability, minimum coverage offered and employee full-time status – in order to ensure compliance.

The Simplified Statements for 95 Percent OfferAvailable for 2015 only, this alternative allows certain employers to provide a “general statement” in lieu of filing Form 1095-C. They must certify on Form 1094-C that they have made qualifying offers to at least 95 percent of their full-time employees, their spouses and dependent(s).

The information provided to employees through a “general statement” must be in a format “prescribed by the IRS” and must state that:

1. the employees (plus any spouse and/or dependents) received a qualifying offer for all 12 months of the year
2. and therefore, they generally are ineligible for a premium tax credit for any of those 12 months.

These statements may vary, depending on whether the employee received a qualifying offer for all, some or none of the months. Thus, if the qualifying offer did not apply to an employee for the entire 12 months, the statement likely will inform them that any of the aforementioned entities may be eligible to claim a premium tax credit for any month in which a qualifying offer was not made.

Additionally, the statements must supply a contact name — which can be a member of the ALE or a third-party administrator — and telephone number, should an employee wish to call for additional information.

The 98 Percent OfferFor employers who offer qualifying coverage to at least 98 percent of their full-time employees, this third reporting alternative is available. It does not excuse them from submitting Form 1095-C, but does allow them to bypass two data points on Forms 1094-C and 1095-C:

the month-to-month full-time status of employees

and the monthly total of full-time employees.

Employers who offer coverage to “substantially all” of their full-time employees may lessen the burden on themselves to track and record hours of service in order to identify the number of full-time employees for each month. Because Form 1094-C appears to require reporting of members ranked by full-time employees, it isn’t clear whether or not this option is possible for aggregated groups.

Are the General Statements Useful?For many, the general statement may cause more confusion than it’s worth; it may be simpler for employers to distribute a copy of Form 1095-C.

Also, it is possible that taxpayers may need to enter information from Form 1095-C on their year-end personal income tax returns, so those receiving the general statement may have to contact their HR department to obtain that information. While the IRS has not yet given guidance on the format of these statements, the bureau does require both an employer contact name and phone number for verification purposes.

The Simplified EndingIn closing, the simplified reporting alternatives may prove useful for a number of organizations, but a lot remains up to the interpretation of the law and each business’ ability to anticipate if it will be eligible to use these alternatives. If you are among the two-thirds of businesses not ready to comply with the 2015 reporting requirements, it is in your best interest to talk to a Paycom representative today.

The content of this blog is intended to keep interested parties informed of legal and industry developments for educational purposes only. It is not intended as legal opinion or tax advice and should not be regarded as a substitute for legal or tax advice.

Author Bio: Jason Bodin has been the communications pulse for a number of organizations, including Paycom, where he serves as director of public relations and corporate communications. He helped launch Paycom’s blog, webinar platform and social media channels. He aided in the development of Paycom’s tool to assist organizations in complying with the Affordable Care Act, one of the largest changes in health care the country has seen. A graduate of the University of Oklahoma, Bodin previously worked for ESPN and FoxSports. In his free time, he enjoys adventuring with his family, reading and strengthen his business acumen.

ACA ‘Cadillac Tax’ Delayed to 2022

January 26, 2018

The short-term spending bill that ended the government shutdown on Jan. 22 included a small provision that again delayed the Affordable Care Act’s (ACA) “Cadillac tax,” now to 2022.

So nicknamed because it targets employer-sponsored health plans with the most generous level of benefits, the Cadillac tax originally was to take effect in 2018. In 2015, the effective date was pushed to 2020, and now the new bill pushes the effective date two additional years into the future.

When – or if – the Cadillac tax goes into effect, it will impose a 40% excise on the cost of employer-sponsored health coverage exceeding a certain dollar value per employee. The dollar value would have been $10,200 for individual coverage and $27,500 for family coverage in 2018, had the tax not been delayed. The law calls for the amount to be adjusted annually with growth in the consumer price index.

How does this affect Employers?

Employers do not have to contend with the tax for an additional two years. The IRS has not yet issued regulations addressing implementation; with this additional delay, the agency likely will not do so in the near future.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

Author Bio: As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.

As issued in Notice 2018-06, the IRS has extended the deadline from Jan. 31 to March 2. (However, the deadline to provide Forms W-2 and 1099 to employees and contract workers remains as Jan. 31.)

Filing deadlines unchanged

While the deadline to furnish forms was extended, the filing deadlines remain the same: Feb. 28 for paper forms, and April 2 for electronic forms.

IRS Notice 2018-06 emphasizes that employers who do not comply with the due dates for furnishing or filing are subject to penalties under sections 6722 or 6721.

Good-faith transition relief extended

The IRS also announced the extension of good-faith transition relief. This may allow an employer to avoid some penalties if it can show that it made good-faith efforts to comply with the information reporting requirements for 2017.

This relief applies only to incorrect and incomplete information reported on the ACA forms, and not to a failure to file or furnish the forms in a timely manner. Additionally, the IRS stated it does not anticipate extending either the good-faith transition relief or the furnishing deadline in future years.

Contact a trusted tax professional if you have questions on how this may affect your business specifically.

Click here to read more about how the ACA is affect by the new Tax Cuts and Jobs Act.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

Author Bio: As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.

Employers Unaffected by ACA Changes in New Tax Law

December 22, 2017

On December 22, President Trump signed the Tax Cuts and Jobs Act. The bill includes a provision that reduces the penalty for not complying with the Affordable Care Act’s (ACA) individual mandate to $0, effectively removing the penalty for individuals who do not have health insurance coverage after the effective date of Jan. 1, 2019.

However, this update will not impact employers, since the law does not remove the employer mandate (the requirement that large employers offer health insurance coverage to their full-time employees or pay a penalty) or the associated employer reporting requirements. Large employers subject to the mandate still face penalties if they fail to comply with either, and the IRS has begun sending out notices with preliminary assessments of the employer shared responsibility penalty for tax year 2015.

Employers subject to the employer mandate should continue to comply and be prepared to file Forms 1094 and 1095 with the IRS in accordance with the normal deadlines.

For the 2017 tax year, the deadlines to provide Forms 1095-C to employees is Jan. 31, 2018. The deadline to file Forms 1094-C and 1095-C with the IRS is Feb. 28, 2018 if filing paper forms, and April 2, 2018, if filing electronically.

Disclaimer: This blog includes general information about legal issues and developments in the law. Such materials are for informational purposes only and may not reflect the most current legal developments. These informational materials are not intended, and must not be taken, as legal advice on any particular set of facts or circumstances. You need to contact a lawyer licensed in your jurisdiction for advice on specific legal problems.

Author Bio: As a compliance attorney for Paycom, Erin Maxwell monitors legal and regulatory changes at the state and federal level, focusing on health and employee benefits laws, to ensure the Paycom system is updated accordingly. She previously served as assistant general counsel at Asset Servicing Group in Oklahoma City. She holds a bachelor’s degree from the University of Central Oklahoma and a J.D. from the University of Oklahoma. Outside of work, Maxwell enjoys politics, historical mysteries and spending time with her family.